Trust & Estate Litigation

We live in an increasingly litigious society, and the number of lawsuits contesting the validity of wills and trusts has risen dramatically. There are numerous grounds for contest including lack of capacity and undue influence. These factors are discussed in further detail in this article. Other common grounds for contest include improper execution, revocation and fraud.

California law allows a testator to dispose of property as he or she sees fit without regard to whether the disposition of assets is appropriate or fair. Consequently, challenges to estate planning documents often arise when you have children or spouses who are not treated as equal beneficiaries of an estate, or who are disinherited altogether. A child who receives a lesser share of the estate may attempt to challenge the validity of the estate plan, or a spouse may challenge the characterization of assets (community vs. separate property) included in an estate plan. By invalidating the estate planning documents the contestant may receive a greater portion of the estate under California intestate succession, which governs distribution when the person dies without a valid will or trust. Alternatively, the contestant may receive a greater share under a prior estate planning document.

Standards for Determining Legal Capacity

A fairly low standard gauges whether a testator has sufficient legal capacity to create a valid will. Basically, the testator only needs to understand the nature of what the will accomplishes, have a general understanding of what his assets consist of and their value, and must know who his relatives and beneficiaries are. If the testator does not have such sufficient capacity or the estate plan is the product of a mental disorder with symptoms of delusions or hallucinations, then testamentary capacity is lacking under California Probate Code section 6100.5(a).

A testator is presumed to have capacity at the time of signing the will, therefore the contestant has the burden of establishing that the testator lacked capacity. In determining a testator had insufficient mental capacity at the time of signing, there must be supporting evidence of a deficit in at least one of several mental functions enumerated in California Probate Code section 811. Some of the functions mentioned include the ability to reason logically, recognize familiar objects and persons, and have short and long-term memory, including immediate memory recall. To view Section 811 in its entirety, click here.

It is important to note that the standard for legal capacity to sign a trust is higher than the aforementioned standard for testamentary capacity to sign a will. In Estate of Bodger, 130 Cal.App.2d 416, 425 (1955), the court stated, “A declaration of trust constitutes a contract between the trustor and the trustee for the benefit of a third party.” As a contract involving a transfer or conveyance of property, a trust requires contractual capacity which is measured by whether the trustor understands the nature and extent of the transaction. This same standard of capacity applies to other common estate planning devices including deeds and powers of attorney.

The different standards for capacity to create a trust or will are also reflected in California’s statutes regarding conservatorships. Probate Code sections 1870 and 1872 provide that a conservatee is deemed to lack the capacity to contract or transfer property, while Probate Code section 1871 states that a conservatee retains the right to make a will despite the imposition of a conservatorship.

Undue Influence

“Undue influence” is generally defined as force or pressure that causes the testator to do something they ordinarily would not have done. Merely having some influence over someone is not undue influence; the person exerting the influence must have pressured or coerced the testator into making a gift or plan of distribution they ordinarily would not have done. As with lack of capacity claims, undue influence claims commonly examine whether the testator’s mental and physical condition was diminished to the point it made him or her susceptible to undue influence. Proof of an undue influence claim requires evidence that the testator was both susceptible and actually subject to undue influence. Undue influence is presumed to exist where the proponent of a will or trust (i) has a fiduciary or confidential relationship with the testator; (ii) actively participated in the preparation or execution of the instrument; and (iii) receives an “undue” profit. Estate of Sarabia (1990) 221 Cal.App.3d 599, 605. Undue influence also is presumed for gifts to care custodians under Probate Code section 21350(a)(6), unless the instrument was subject to independent review by another attorney. Significantly, a presumption of undue influence shifts the burden of proof to the proponent of the instrument to establish the instrument was freely made.

Should the signing of the document be videotaped?

It has become increasingly common for attorneys to videotape the signing of estate planning documents, particularly when the testator’s capacity is in question, or when the attorney anticipates a challenge from disinherited family members. A videotape in which the testator clearly and unequivocally expresses his or her desires in an articulate manner can be compelling evidence of the testator’s capacity and intent. However, videotapes pose a danger in that any perceived defects in the testator’s performance on the tape may be interpreted by the contestant as evidence of the testator’s lack of competency.

If the drafting attorney does not routinely videotape clients signing documents, the fact that the attorney chose to videotape a particular client’s signing may indicate that the attorney had questions as to the client’s capacity. Videotapes are easy to edit, and if it appears that the videotape merely captures snippets of the signing conference, the inference may be that the tape was edited to only show conduct favorable to establishing the testator’s sufficient capacity.

No Contest Clauses

A “no contest” clause is a statement in a will or trust that if a beneficiary chooses to contest the instrument, they will forfeit any gift given to them under the instrument. These clauses vary from simple statements comprised of a sentence or two to clauses that encompass several pages and define a contest to include not only challenges to the provisions of the will or trust, but claims made on any of the testator’s assets.

No contest clauses are generally enforceable in California and will disinherit the contestant. However, there are exceptions: Probate Code section 21305(a) defines certain actions that do not constitute a contest unless specifically prohibited in the no contest clause. Some of these actions include filing a creditor’s claim or an action to determine the character, title or ownership of property, or challenging the validity of a document which does not contain the no contest clause, such as a beneficiary designation. Under Probate Code section 21305(b) certain actions – including pleadings regarding removal of a fiduciary or accountings – are not contests as a matter of public policy.

Pursuant to California Probate Code section 21306, a no contest clause is not enforceable where a beneficiary with reasonable cause brings a contest based on forgery, revocation, or an action under Probate Code section 21350, which includes gifts to caregivers. To view California Probate Code sections 21300-21308, click here.

No contest clauses are most effective when there is a gift that the potential contestant may have to forfeit; it is advisable to give the potential contestant a gift substantial enough to cause them to reconsider litigation. Even a relatively small gift may avert future litigation and ultimately save the estate from the cost of defending against a challenge. With few exceptions, each party bears its own attorney’s fees and costs in a contest.

Seek Experienced Legal Counsel

It is important to be completely candid with your estate planning attorney about anyone who you anticipate may attempt to contest your will or trust. There is no guarantee that someone will not file a lawsuit contesting the terms of your estate planning documents. However, experienced estate planning attorneys can advise you on steps to take to minimize the potential for litigation.

If you have further questions regarding trusts and estates, we invite you to contact us to discuss your questions and specific needs. The attorneys at the San Diego estate planning firm of Law Offices of Scott C. Soady, APC have particular expertise in the areas of estate planning and elder law. Contact our office by e-mail or call us toll-free at (877) 435-7411 within California, or (858) 618-5510 outside of California to schedule a free in-house consultation.